Singapore seals $10b financial deal with Indonesia

It will make a local currency bilateral swap agreement where both central banks can exchange up to $9.5b.

The Monetary Authority of Singapore (MAS) has entered into a S$13.76b (US$10b) bilateral financial arrangement with the Bank of Indonesia (BI) which will allow both parties to access foreign currency liquidity should the need to preserve monetary and financial stability arise.

“Economic fundamentals in the regional economies remain sound,” MAS managing director Ravi Menon said in a statement. “But markets can sometimes overreact in the face of heightened uncertainty.”

The deal is divided into two key provisions where the first one will create a new local currency bilateral swap agreement which will enable the exchange of local currencies between the two central banks of up to $9.5b or IDR 100t.

“The initiative reflects the strengthened bilateral monetary and financial cooperation between Singapore and Indonesia, and indicates the commitment of the authorities of Indonesia and Singapore to maintain financial stability amid the lingering uncertainty in the global financial market,” BI governor Perry Warjiyo commented.

Also enclosed in the pact is an enhanced bilateral repo agreement of $4.13b (US$3b) from the current size of $1.38b (US$1b) The upgrade will allow repurchase transactions between the two central banks to obtain USD cash using Government Bonds of major countries as collateral.